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What Happened:
Shares of network application delivery and security specialist F5 (NASDAQ:FFIV) jumped 7.25% in the afternoon session after the company reported third-quarter results that narrowly beat analysts' revenue expectations. On a brighter note, earnings per share beat by an impressive 12%. Free cash flow also improved significantly compared to the previous quarter. Management added some bullish comments, stating that demand is stabilizing and that F5 Networks should be able to grow non-GAAP EPS by a double-digit percentage, which is higher than expectations. That really stood out as a positive in these results. On the other hand, its underwhelming revenue guidance for next quarter was disappointing (although next quarter's EPS guidance was in-line). Overall, this was a mixed quarter for F5 Networks, but the double-digit percentage non-GAAP EPS growth for the full year is being received well. After the initial pop the shares cooled down to $159, up 0.02% from previous close.
What is the market telling us:
F5 Networks's shares are not very volatile than the market average and over the last year have had only 4 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was three months ago, when the stock dropped 6.85% on the news that the company reported underwhelming earnings, which narrowly beat analysts' revenue estimates. However, revenue guidance for the next quarter was below consensus estimates. Following the results, Barclays analyst downgraded the stock's rating from Overweight (Buy) to Equal-Weight (Hold).
F5 Networks is up 9.77% since the beginning of the year, and at $159 per share it is trading close to its 52-week high of $173.70 from August 2022. Investors who bought $1,000 worth of F5 Networks' shares 5 years ago would now be looking at an investment worth $907.53.
Is now the time to buy F5 Networks? Access our full analysis of the earnings results here, it's free.
Network application delivery and security specialist F5 (NASDAQ:FFIV) will be reporting results tomorrow after market hours. Here's what to expect.
Last quarter F5 Networks reported revenues of $703.2 million, up 10.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter.
Is F5 Networks buy or sell heading into the earnings? Read our full analysis here, it's free.
This quarter analysts are expecting F5 Networks's revenue to grow 3.76% year on year to $699.8 million, in line with the 3.53% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $2.86 per share.
Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company only missed Wall St's revenue estimates once over the last two years, and has on average exceeded top line expectations by 0.97%.
With F5 Networks being the first among its peers to report earnings this season, we don't have anywhere else to look at to get a hint at how this quarter will unravel for software stocks, but there has been positive sentiment among investors in the segment, with the stocks up on average 9.12% over the last month. F5 Networks is up 2.99% during the same time, and is heading into the earnings with analyst price target of $157.02, compared to share price of $148.70.
One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.
The author has no position in any of the stocks mentioned.
Analysts have been eager to weigh in on the Technology sector with new ratings on Alphabet Class A (GOOGL – Research Report) and F5 Networks (FFIV – Research Report).
Alphabet Class A (GOOGL)
In a report released today, Eric Sheridan from Goldman Sachs reiterated a Buy rating on Alphabet Class A, with a price target of $152.00. The company’s shares closed last Tuesday at $122.21, close to its 52-week high of $129.04.
According to TipRanks.com, Sheridan is a 5-star analyst with an average return of 13.6% and a 60.6% success rate. Sheridan covers the Technology sector, focusing on stocks such as Spotify Technology SA, DoubleVerify Holdings, and Fiverr International.
Currently, the analyst consensus on Alphabet Class A is a Strong Buy with an average price target of $139.60, a 15.0% upside from current levels. In a report issued on July 20, Mizuho Securities also maintained a Buy rating on the stock with a $135.00 price target.
See the top stocks recommended by analysts >>
F5 Networks (FFIV)
In a report released yesterday, Meta Marshall from Morgan Stanley maintained a Hold rating on F5 Networks, with a price target of $165.00. The company’s shares closed last Tuesday at $158.98.
According to TipRanks.com, Marshall is a 4-star analyst with an average return of 5.5% and a 54.9% success rate. Marshall covers the Technology sector, focusing on stocks such as Hewlett Packard Enterprise, Zoom Video Communications, and Keysight Technologies.
Currently, the analyst consensus on F5 Networks is a Hold with an average price target of $167.33, implying a 1.4% upside from current levels. In a report issued on July 24, Jefferies also maintained a Hold rating on the stock with a $150.00 price target.
TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.
Read More on GOOGL:
It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors.
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Is This 1 Momentum Stock a Screaming Buy Right Now?
Momentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
F5 Networks (FFIV)
Seattle, WA-based F5 Networks Inc, founded in 1996, provides products and services to manage Internet traffic worldwide. Its application, delivery and networking products Strengthen performance, availability and security of applications running on networks that use the Internet Protocol (IP).
FFIV sits at a Zacks Rank #3 (Hold), holds a Momentum Style Score of B, and has a VGM Score of B. The stock is down 1.6% and up 4.1% over the past one-week and four-week period, respectively, and F5 Networks has lost 10.7% in the last one-year period as well. Additionally, an average of 676,064.38 shares were traded over the last 20 trading sessions.
Momentum investors also pay close attention to a company's earnings. For FFIV, nine analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.35 to $11.42 per share for 2023. FFIV boasts an average earnings surprise of 6.4%.
With strong earnings growth, a good Zacks Rank, and top-tier Momentum and VGM Style Scores, investors should think about adding FFIV to their portfolios.
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F5, Inc. (FFIV) : Free Stock Analysis Report
